It seems that some positive news has been received by those businesses in Nepal that rely on cargo transport to and from India. Nepali industrialists and traders had been complaining about their goods being stuck at the border in Nepal and at the sea ports in Kolkata and Vishakhapatnam due to a lack of railway rakes to carry containers of finished goods or raw materials. And because only Birgunj is currently connected to India’s railway network, the entry of goods into Nepal is currently bottlenecked. This leads to an increase in the costs of these goods that are meant for parts of the country closer to other border points. Now, traders and industrialists have received a shot in the arm from two separate developments. One is the Indian commitment to increase the number of rakes allocated to Nepal to transport cargo containers. The other is the successful trialling of goods transported from Kolkata via railway to a second customs point other than Birgunj. While these are indeed welcome developments, the Nepali authorities concerned have to work to make sure the Indian side stick to their pledges.

Requests were made by the Nepali side during a Nepal-India Inter-Governmental Committee (IGC) meeting last Friday for India to increase the number of railway rakes allotted to Nepal from the current 18-20 rakes (to and from the Birgunj Dry Port) to at least 100 to alleviate the transport barriers businesses face. India has responded by agreeing in principle to allocate 125 rakes for cargo transport to and from Nepal. Also, following meetings of the IGC where Nepal made overtures to the Indian side to extend cargo rail connectivity to major Nepal-India customs points, Indian Railways’ container arm completed a trial run from Kolkata to Bathana in Bihar. The trial, which consisted of a cargo train carrying 58 containers from Kolkata, is significant because it opens up the possibility of a second cargo rail route to link Nepal with India. Bathana is 6kms from Jogbani, the Indian border town near Biratnagar.

If provided, the additional rakes would be a major boost for businesses that rely on the railway network to import materials/goods from parts of India or from third countries, and use the same channel to export finished goods for sale. For example, 1230 containers meant for Birgunj were stranded in Kolkata this past Saturday due to a lack of rakes. Similarly, 589 containers with goods and another 313 empty ones were stuck at Birgunj on the same day. Steel companies in the Bara-Parsa corridor have been complaining of raw material shortages, which they had to cover from other sources—thereby increasing production costs. At the same time, opening of the second railway route to and from Biratnagar is estimated to reduce transportation costs in that industrial/trade corridor by up to Rs2 per kilogramme—a massive cost reduction when looking at the volume of trade.

Ultimately, these developments—one agreed upon in principle and one in trial phase—will only help if they are implemented. There have been many examples in the past where implementation of trade and transit agreements has been left unfulfilled. The Nepali government has to continuously raise these issues with the concerned Indian agencies, and New Delhi and Kathmandu need to make a coordinated effort to iron out irritants, minor and major, in the bilateral relationship.